A FALLING exchange rate from above parity to about 73 US cents is keeping Australian producers competitive in export markets.
But Rabobank Food & Agribusiness Research and Advisory general manager Luke Chandler said it was critical to take steps to boost on-farm productivity.
Mr Chandler, a guest speaker at the Grasslands Society of Southern Australia annual conference held in Naracoorte, said Australia had become the highest-cost producer of wheat among major exporting nations, and exports were continually being eroded as importers switched to lower-cost countries.
"We have been lucky it has come at the same time as the growth in the Asian markets but even in SE Asian markets we are seeing Black Sea wheat going in at cheaper than Australia," he said.
In the past decade, Australian dairyfarmers had gone from being one of the lowest-cost producers to one of the highest.
Post farmgate competitiveness was under pressure, with high labour and high electricity costs.
"It is now 30 per cent more expensive to manufacture something in Australia than it is in the US and our labour rates are higher than Germany at the moment," Mr Chandler said.
"Inefficient supply chains were are also increasing our cost base to get product from farm to consumer, such as inefficient rail."
Mr Chandler said Australian farmers had long been at the forefront of adopting new technology but cutbacks in research were taking their toll, with productivity gains in the past decade at an average 1.4pc a year compared to 1.7pc globally.
"We have some really strong headwinds on the cost competitiveness front to make sure as an exporting nation that we get our market share and extract a premium price," he said.
He highlighted weaker prices for nearly all commodities around the world due to the weak global economy.
Beef prices were the shining light in Australian agriculture with the Eastern Young Cattle Indicator up 48pc year on year.
